The Public Accounts Committee’s report yesterday on HMRC Tax Collection got me thinking on the problem of accountability of the PAC.

I think it is quite right that questions are raised over the efficiency of HMRC and there are important issues relating to HMRC resourcing which were within the remit of the report. However, these issues were rather put in the shadows by the PAC’s penchant for indulging in sensationalism.

Personally, I don’t think the PAC is the forum for dealing with tax policy, to answer the question which Andrew Goodall asked in a post yesterday. I think the questions should be asked, but I do not believe that the PAC is the right place.

For starters, it is not within its remit. The PAC has complained of a lack of resources itself. So why is it wasting its limited resources on something that is dealt with by other committees (such as the Treasury Select Committee)? Why this duplication of Parliamentary effort?

Covering the same thing twice is, ironically, wasteful. And it means that the PAC is neglecting other areas it should be looking at. Given that spending is under such a universal squeeze, there is probably a lot of efficiencies they could be considering…

I’m inclined to accept that the answer lies purely in the political capital that the committee members seek to gain. It gives politicians, the committee’s chair in particular, the chance to moralise about a topic which produces strong, predictable, emotions from the public.

It’s hugely important that we all take a stand and damage the reputation and business of companies that deliberately avoid paying their fare share of tax to the common purse for the common good.

But, this is Hodge’s problem: She doesn’t have a clue what a ‘fair share of tax’ looks like. And nor does the media or most of the populist commentators who get quoted.

Call me biased, but I think people who work in tax, in HMRC and the tax advisory profession, are a lot more qualified and a lot more objective in identifying what is a ‘fair share of tax’. And the PAC has disregarded most of the evidence of witnesses from those quarters.

Instead, it has preferred to accept untested and unqualified opinions based on incomplete facts from their more preferred witnesses.

Starbucks is a prime example of the shoddy reporting of facts and prevalence of inflated opinions that have dominated the tax avoidance debate. Margaret Hodge has no objective evidence for stating that Starbucks has not paid its ‘fair share of tax’ according to our system.

That is not to say our system could not be better. It needs to improve and evolve.

However, as far as I am concerned, and HMRC is concerned judging from its response, that ‘fair share of tax’ is established with respect to the law as it is enacted, not how we wish it might have been enacted. HMRC’s response to the PAC report goes to great lengths to point this out.

Ultimately, a ‘fair share of tax’ is determined by democratically enacted statue as interpreted by an independent judiciary.

And before you attack the straw man, this is not saying “it’s legal so it’s ok”. I am simply saying that Parliament should not be a hypocrite. Its voice is first and foremost statute and committees should not become venues for politicians to grind their personal axes.

Select Committees have effectively become public courts where individuals are tried not on the veracity of their case but on how well they manage to perform in the Committee Room bear-pit. And the sentence, should one’s performance not be up to scratch, can be a severely damaged reputation or even loss of employment. In truth, some now appear before Select Committees not as witnesses but as the accused but without any of the protections usually offered to those appearing in the dock.

In private I have previously referred to the PAC as a kangaroo court. It is regrettable that I now feel it is appropriate to express this view publicly.

3 Responses to Who accounts for the Accounts Committee?

I think the PAC has been brought into disrepute by the grandstanding of its members, particularly its chairman. Hodge is is my view using it as a forum to enhance her own profile.

Basic errors are being made by the PAC: see the PAC report this week (wonderfully this was report no 666) where they refer to HMRC creating policy (nonsense, HMRC are an enforcement organisation).

When you have an MP on a committee behaving in this way and being cheered on by some you have to wonder about the risk to UK PLC; consultancies are already using the PAC hearings as evidence of a hostile climate to business in the UK.

I already have (anecdotal) evidence of this risk being crystallised. A number of clients have made comments in connection with HMRC enquiries that large companies can make cosy deals so they feel less inclined to co-operate; and similar ones in relation to tax planning: how come they have to pay 45% on their income when Google/Starbucks/Amazon can get it tax-free. It’s just been a grumble so far, but I fear it’s eroding the compliance culture. People are getting less inclined to play fair with HMRC, because they keep being told that HMRC is not playing fair with them.

I try and set them straight, but charge-out rates and client relationship management mean I can’t really justify bending their ears for too long by ranting about the mis-representation of tax by the media, campaigners, and the PAC (I almost include the PAC as campaigners…).

quite right Ben. The role of the PAC is to monitor government spending! Why and how Hodge changed the role to attack tax-payers instead is worthy of question. Perhaps because she dreaded exposure of the “investment” polcies of the governments in which she played a role? And how and why did the other members of the committee go along with her hypocritical self-aggrandising stance?